Gyuzel Gubeidullina, Yevgeniya Pismennaya
Finance Ministry expects share prices to go up
Market
Before the week is out, Prime Minister Vladimir Putin may sign a resolution on the criteria for state investments in Russian shares and bonds. The first money could reach the market within a week's time.
Last Friday, Mr Putin promised that the Government would invest 175 billion roubles in Russian stock this week. The money will come from the National Welfare Fund, through Vneshekonombank (VEB), added Finance Minister Alexei Kudrin. No more than 5% of each company's bonds and shares will be bought at a time.
The market has not yet received the money, and the RTS index lost 7% between Monday and Wednesday, while the volume of trading reached a new low.
Yesterday, however, the Finance Ministry submitted a package of draft amendments to the government resolution On the Management of the National Welfare Fund to the Government, Deputy Minister Dmitry Pankin told Vedomosti. The resolution was agreed upon by all departments concerned - the Federal Financial Markets Service, the Economic Development Ministry, and Vneshekonombank. Deputy Economic Development Minister Anna Popova said that her Ministry also approved the amendments. A source in the FFMS said its agency did the same.
A staff member of the Presidential Executive Office expected the amendments to be signed by Mr Putin and be published before the end of the week. Dmitry Peskov, Mr Putin's press secretary, said he had not seen the document. A government source believes the money will become available within a week of signing.
The Finance Ministry will deposit the money in an account with VEB, and the bank will be able to use it to buy shares and bonds, Mr Pankin said. A government member familiar with the document said the 175 billion roubles would be invested in readily tradable stock covered by stock exchange indices and bonds with a rating not lower than BB. The amendments do not address the issue of obligatory state participation in the issuer's capital, he said.
Pyotr Kazakevich, deputy head of a Finance Ministry department, says the money will be invested in blue chips, but their list is not yet prepared. It will be approved officially by the Finance Ministry, say two officials who took part in drafting the document.
The owner of securities will be the Finance Ministry, said a Vedomosti source, while securities themselves will be bought by VEB through a special deposit account.
VEB will select securities in accordance with contract terms to be determined by the Finance Ministry and Vneshekonombank, terms that are now under discussion, Mr Pankin said.
No 5% limit will be put on investments in each company's security, Mr Pankin said. Most likely, the cap will be fixed by Finance Ministry order and be as high as 10%, said another executive of the Ministry.
In the Russian context, BB is a high rating and is given to large corporations and first-ranking banks, said Mikhail Galkin, MDM-Bank analyst. Bonds with such a rating, trading with state securities, amount to 1.5 trillion roubles. The shares included in the RTS index yesterday had a capitalisation of $371 million.
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State-owned companies: drop in value
- 75.2% VTB (capitalisation $8.5 billion)
- 73% SBERBANK ($25.4 billion)
- 66.8% GAZPROM ($110.8 billion)
- 60.3% ROSNEFT ($40.3 billion)
FROM JANUARY 1 TO OCTOBER 15, 2008
DATA FROM REUTERS, COMPUTED BY VEDOMOSTI